A new GLO Discussion Paper documents a positive relationship between labor-friendly institutions and investment in industrial robots.
GLO Discussion Paper No. 941, 2021
Author Abstract: What drives investment in automation technologies? This paper documents a positive relationship between labor-friendly institutions and investment in industrial robots in a sample of developing and advanced economies. Institutions explain a substantial share of cross-country variation in automation. The relationship between institutions and robots is stronger in sunk cost-intensive industries, where producers are vulnerable to holdup. The result suggests that one reason for producers to invest in automation is to thwart rent appropriation by labor. As a consequence, policies aimed at supporting workers’ welfare by increasing their bargaining power might actually reduce their employment opportunities.
GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS, EconPapers). Complete list of all GLO DPs – downloadable for free.
The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.